Taiwan has announced a sweeping $40 billion defence package aimed at countering what President Lai Ching‑te described as “intensifying” military and political threats from China. The new budget, which significantly expands on earlier proposals, will fund advanced weapons, new missile and drone programs, and technology to combat espionage, cyber threats, and Chinese propaganda.

Speaking at a press conference in Taipei, Lai said Taiwan was facing an increasingly aggressive China that had accelerated preparations for a potential invasion. He stressed that Taiwan’s security posture must evolve rapidly, adding that “there is no room for compromise on national security.”

Lai: Defending a Democratic Taiwan, Not an Ideological Battle

Lai framed the escalating crisis as a defence of Taiwan’s democratic system rather than a debate about independence.

“This is not an ideological struggle, nor a ‘unification vs independence’ debate, but a struggle to defend ‘democratic Taiwan’ and refuse to submit to being ‘China’s Taiwan’.”

According to a translation of his remarks, Lai warned that the most dangerous path for Taiwan would be internal weakness or surrender, not necessarily China’s military force.

“History has proven that compromising with aggression only brings war and enslavement.”

He declared China’s proposal of a Hong Kong‑style “one country, two systems” arrangement an “absolute red line” for Taiwanese society.

What the $40 Billion Defence Budget Will Fund

Defence minister Wellington Koo confirmed that the special budget—covering 2026 to 2033—represents at least $8 billion more than previously planned. It prioritizes:

• Artificial intelligence tools to modernize surveillance and combat systems
• New missile systems designed to strengthen deterrence
• Expanded drone programmes for reconnaissance and precision operations
• Improved procurement processes, aimed at overcoming significant delays in U.S. weapons deliveries
• New protections for Taiwanese citizens abroad, addressing China’s transnational repression tactics

The government aims to increase defence spending to 3.3% of GDP in 2026, with Lai pledging a rise to 5% by 2030.

China Dismisses Taiwan’s Budget as “Disaster‑Making”

China condemned the announcement.
Peng Qingen, spokesperson for Beijing’s Taiwan Affairs Office, accused Taiwan of wasting money to “curry favour with external powers.”

“This will only plunge Taiwan into disaster.”

Beijing insists Taiwan is part of China and has never ruled out force to achieve unification.

US Calls Taiwan’s Move a Step Toward Stability

The U.S. representative in Taipei, Raymond Greene, welcomed Taiwan’s defence expansion, calling it:

“A major step toward maintaining peace and stability across the Taiwan Strait by strengthening deterrence.”

The budget announcement came shortly after a phone call between U.S. President Donald Trump and Chinese leader Xi Jinping, during which Xi restated China’s intention to eventually annex Taiwan.

Japan–China Tensions Add to Regional Strains

The announcement also coincides with a growing dispute between China and Japan over Taiwan’s future.

Japan’s prime minister, Sanae Takaichi, recently said her country would likely intervene militarily if China attacked Taiwan—comments that Beijing said were provocative.
China has responded with economic retaliation and criticized Japan’s plans to deploy missiles on Yonaguni Island, just 110 km from Taiwan’s east coast.

During a recent visit, Japan’s defence minister Shinjiro Koizumi said preparations for the new missile deployment were “progressing steadily.”

China accused Japan of escalating regional tensions:

“Japan’s deployment of offensive weapons near China’s Taiwan region is extremely dangerous… We will crush all foreign interference.”